Guest Commentary: Leveraging Core Competencies for Economic Development

By Matt Williams

Note: This article was originally published in May 2016 and has been re-published by request of the author.

Successful economic development starts with a strategy that builds on a community’s core competencies, and then expands that strategy into tactics that leverage the core competencies.

Working more collaboratively with UCD, ideally on mutual timetables, is essential to making progress in building the innovation economy in Davis.

The strategy of leveraging the research programs and intellectual capital of UC Davis is solid.  The “pauses” of both Davis Innovation Center and Mace Ranch Innovation Center (“MRIC”) are because of a failure at the tactical level.   Robb Davis summed up that tactical level failure well when he said in the first article in this series:

For nearly two years we, as a community, have failed to advance a coherent vision for economic development in Davis. Instead we have advanced a peripheral real estate development strategy that has run into an inevitable dead end.  We have not articulated the ends we wish to achieve with an economic development plan, and have thus limited the discussion to revenue generation alone.

David Zehnder, the EPS consultant, confirmed that tactical failure when he reported that the MRIC project pencils out very nicely at $20 per square foot, but poorly at $9-$13 per square foot.

At $9-$13 per square foot the Mace Ranch Innovation Center is just another business park.

We have always known that there is no comparable project near Davis that can validate whether the market supports a $20 per square foot rental rate.  Putting EPS in the position where the comparable projects they are using in their analysis are generic business parks is fiscal forecasting suicide.  The comparable examples that should be in the analysis should be coming from communities where the intellectual capital and research core competencies of the community are successfully being transferred to the private sector, where the value of the innovation they create justifies paying $20 per square foot rather than $9-$13 . . . and if the proximity to the adjacent university’s intellectual capital and research is removed, the high level of value creation evaporates.

Robb Davis was correct when he said:

We have a renewed opportunity to step back and ask

  • What are the ends we want to achieve with economic development?
  • What is the full set of tools we need to utilize (and invest in) to achieve the ends?

The “ends” of economic development are a more diversified and resilient local economy; a variety of jobs that provide meaningful work for people with a variety of gifts; and adaptable work spaces that accommodate start-ups, research and lab space and corporate offices.  Fundamentally, the ends should be about identifying our particular local strengths and focus on actions that build on them.

However, that description doesn’t tell us how we can transcend the $9-$13 per square foot value and achieve a $20 per square foot value.

To do that, the City, the Innovation Center developers, and UCD need to work together to build rock solid documentation of clear examples of evidence of how other cities have leveraged close collaboration with their university’s intellectual capital and research programs to produces $20 per square foot innovation center value creation.

It is not too late to be creating that kind of evidence, and UCD and the City need to truly collaborate in its production.  The entire distributed innovation ecosystem in Davis will benefit from this collaborative effort.

It is important to note that the “non-innovation park” efforts are also crucial to Davis’ economic sustainability.  In this “pause” era, that is even more true.  The focused economic development activities in and close to Downtown are very actively leveraging research and intellectual capital.  Creating a joint community/university value creation message will help those non-innovation center businesses thrive.

In parallel to the steps described above, to address both economic development issues as well as overall quality of life for its residents, Davis needs to build take proactive steps to upgrade its telecommunications/broadband network, replacing the current Comcast-provided network (predominantly coaxial cable, with some fiber) with an all-fiber to the premises (“FTTP”) DavisGIG network.

Why DavisGIG?  Because every home and business in Davis would have lightning fast Internet speeds of up to one Gigabit (1000 Megabits) per second.

To accomplish that, the City has chartered a Broadband Advisory Task Force (“BATF”) to study options for improved broadband access for the City, and make recommendations of future courses of action to the City Council.

The BATF in conjunction with Davis Community Network (“DCN”) is currently seeking proposals for a FTTP Feasibility Study that will present the recommended business direction and operating principles for municipal delivery of fiber optic broadband services to every home and business in Davis.

The Feasibility Study’s business plan, analysis and strategies will focus on how the Davis FTTP market opportunity should be approached from a range of business dimensions including marketing, product design and pricing, organization structure, financial planning, and considerations of risk and competitive behavior.

Improving our telecommunications infrastructure will not only support our community’s economic sustainability, it will also open up opportunities for students in the DJUSD system as they think about their career choices.

Robb Davis captured the essence of what we need to do as a community when he said:

In the months ahead I believe we must join together to develop a renewed economic development strategy that is comprehensive and starts NOT with vague notions of innovation as an end in itself, but with how to foster development given the already existing strengths of this community—which are substantial.

Author’s note for clarification: The $9-13 per square foot and $20 per square foot figures were provided by David Zehnder of EPS in both discussion with the FBC and on page 12 of their report (see LINK) which reads as follows:

Land Value Assumptions 

The price of the developed land determines how much revenue would be generated from each land sale. Broker interviews, comparable sales, assessed values estimated by A. Plescia & Co. as of February 2, 2016 for the Nishi project, and results from a pro forma produced by EPS establish viable finished land parcel values ranging from $9-$13 per square foot of land. This land value is the amount a developer of a building would be willing to pay MRIC land owners after the land owners entitle the land, secure financing, conduct pre-development, conduct grading, and install assumptions used in this report.

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Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

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